Mexico's Cemex to issue at least $421 million notes in exchange offer

By Marisa Wong

Madison, Wis., July 25 - Cemex, SAB de CV set the preliminary size of its offering of 9½% senior secured notes due 2018 in connection with its previously announced exchange offer and consent solicitation.

As of July 19, the "early bird" expiration date, participating creditors elected to receive about $421 million of new 9½% notes. Those creditors will be allocated the full $421 million principal amount, according to a press release on Tuesday.

Cemex said that the final principal amount of new notes is still subject to the previously announced cap of $500 million. The maximum amount may be increased or lowered and will be announced at noon ET on Aug. 20, the expiration of the exchange offer.

Cemex launched the exchange offer and consent solicitation on July 5 as part of its refinancing plan. The company first announced plans for the exchange offer on June 29 and presented the refinancing proposal to its lenders at meetings in New York and Madrid on July 2.

As noted before, the exchange offer is being made to banks that are party to the company's financing agreement dated Aug. 14, 2009. Its terms were negotiated with banks that hold about 50% of the financing.

According to a prior company news release, Cemex is proposing that creditors exchange their existing exposures under the existing financing agreement for one or a combination of the following:

• New loans or, for private placement notes, new private placement notes; or

• Up to $500 million of new 9½% notes due 2018 to be issued by Cemex.

The terms of the new 9½% notes will be substantially similar to those of senior secured notes previously issued by Cemex and/or its subsidiaries.

The new high-yield notes will be callable in 2016 and will be guaranteed by Cemex Mexico, SA de CV, Cemex Espana, SA, Cemex Corp., Cemex Concretos, SA de CV, Empresas Tolteca de Mexico, SA de CV, new Sunward Holding BV and some new guarantors.

In the case of over-subscription, new high-yield notes will be allocated pro rata, and the remaining balance of any subscription would be reallocated to new loans or new private placement notes, as applicable.

Priority was given to tenders received during the early tender period lasting 10 business days. If a holder that tendered during that period was not allocated at least 75% of its requested subscription to the new high-yield notes due to proration, it would have had the option to revoke its tender.

Creditors that participate in the exchange offer will receive an exchange fee of 80 basis points.

New facilities agreement

As previously reported, Cemex said that the proposed transaction effectively treats the exposures of exchanging creditors as being extended to Feb. 14, 2017 from Feb. 14, 2014 under a new facilities agreement.

The new facilities agreement will have the following required amortization payments: $500 million on Feb. 14, 2014, $250 million on June 30, 2016 and $250 million on Dec. 16, 2016.

If Cemex does not pay down $1 billion by March 31, 2013, the maturity date of the new facilities agreement will revert to Feb. 14, 2014. The company has a 90-day extension option for the March 31, 2013 milestone date subject to two-thirds participating creditor approval. Cemex said the sources for the initial $1 billion paydown may include asset sales.

In addition, the Feb. 14, 2017 maturity date will be reset to earlier dates if any capital markets debt of Cemex and/or its subsidiaries maturing prior to Feb. 14, 2017 is not entirely refinanced prior to maturity.

After April 1, 2015, if the volume-weighted average closing sale price of Cemex's American Depositary Shares on the New York Stock Exchange exceeds $14.50 during the preceding 90-day period, the holders of the new loans and the new private placement notes will be entitled to an additional cash fee of 0.5%. It will be payable 120 days after the trigger date and at the end of each following quarter.

If the company has repaid $2 billion to $3 billion of the new facilities agreement exposures prior to the date of payment, this additional fee will be reduced pro rata based on the amount repaid, with no fee being payable at any time the total exposures have been reduced by at least $3 billion.

Consent request, amendment fee

The proposed consent request includes the following:

• The consent of the majority of participating creditors under the existing financing agreement (66.67%) to some amendments to the existing financing agreement, including deletion of all mandatory prepayment provisions, representations, information and general undertakings, financial covenants and covenant reset date provisions and events of default other than payment, insolvency and insolvency proceedings; and

• The consent of the super majority of participating creditors under the existing financing agreement (85%) and the super majority of the instructing group (85%) to release, on the date of closing of the proposed transaction, all of the security created or granted in favor of the secured parties under the existing financing agreement documentation.

Participating creditors that consent to the proposed amendments will receive a consent fee equal to 20 bps.

If at least one holder of existing private placement notes provides the consent to the proposed amendments, all holders of existing private placement notes will receive the amendment fee as required under the existing note purchase agreement.

Conditions

The refinancing plan is subject to the receipt of the needed consent levels for the proposed amendments and participating creditors representing at least 95% of existing exposures accepting the exchange offer.

The exchange agent is Citibank International plc (+44 0 207 508 3867 or exchange.gats@citi.com).

Cemex is a Monterrey, Mexico-based building materials supplier and cement producer.

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